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Understanding Coverage & Exclusions in Marine Cargo Insurance

Understanding Coverage & Exclusions in Marine Cargo Insurance

Many individuals and businesses rely on the shipping and logistics industry – from a family moving their belongings to a new home overseas to manufacturers, wholesalers and retailers who need sea freight to operate.

If your business is involved in the movement of goods via sea freight, you will need to ensure you have reliable cover to cover yourself and your business for any perils that occur along the way. Losing or damaging goods could ruin your business bottom line – not having adequate insurance simply isn’t worth the risk.

But what does marine cargo insurance usually cover? And are there any exclusions you may need to get additional coverage for?

Marine Cargo Insurance

What Is Covered in Marine Cargo Insurance?

Marine Cargo Insurance is designed to cover accidents and unforeseen incidents that result in lost or damaged goods while you are in transit on the sea. The goal is to protect your business from revenue loss. That is the broad definition – there are in fact different types of Marine Cargo coverage to consider depending on your business activities, risk exposures and other factors.

The two main types of Marine Cargo Insurance to consider are:

  • Named Perils Coverage
  • All-Risk Coverage

What Is Named Perils Coverage?

Named Perils Insurance, or Institute Cargo Clauses B & C offers limited Marine Cargo coverage as it only covers loss or damage caused by specific perils as outlined in a policy. You will not be covered for any perils that are not named in the policy.

Named Perils coverage usually covers the following type of damage or loss:

  • Collision
  • Burning
  • Stranding
  • Sinking
  • Fire

What Is All-Risk Coverage?

All-Risk Marine Cargo Insurance, also known as Institute Cargo A, provides the most comprehensive coverage. It covers all types of damage and loss apart from those excluded in the policy.

While All-Risk Marine Cargo Insurance offers higher protection and security for your business and assets, it’s important to be aware of common exclusions. Note that you may be able to add coverage for some exclusions in an All-Risk policy as an additional cause.

Marine Cargo

What Are Common Exclusions in a Marine Cargo Insurance Policy?

Exclusions may vary depending on the insurer, but below are some of the common exclusions in an All-Risk Marine Cargo Insurance policy:

  • Negligence – errors, misconduct or omissions by carriers or ship personnel
  • Insolvency – of carrier or shipping company
  • Failure to pay – failing to ship goods to a purchaser
  • Wear and tear – ordinary wear, tear and breakage
  • Misconduct – wilful misconduct of the policyholder/insured
  • Inherent vice – the damage or deterioration of goods due to the natural state of a product or defected characteristic
  • Delay

Every business has unique needs and a policy can be tailored accordingly. The key thing is to understand the specific terms of your policy and exactly what you are covered for to avoid any financial detriment as the result of an incident or claim.

Truck Insurance HQ has extensive experience dealing with businesses in the transport and logistics industry. Our brokers understand the risks you face and can work closely with you to find tailored insurance solutions that protect your business. Give us a call on 1300 815 344 to discuss your options.